Bosnia Staggers Closer to IMF Funds

Sarajevo | 30 July 2009 | Srecko Latal
Encumbered by petty political plots and growing social unrest, Bosnia is staggering closer to garnering a first loan tranche from the IMF.

Both Bosnian entities – the Bosniak (Bosnian Muslim) and Croat Federation and predominately Serb Republika Srpska – have moved closer to adopting required budget rebalances over the past few days.

Once this process is complete, Bosnia and Herzegovina will have met the first benchmark in curbing its expenditures and will be able to start using the first tranche of an IMF loan, totalling US$ 280 million, which has already transferred to the country’s Central Bank.

Earlier this year, Bosnia secured a US$1.6 billion loan from the IMF, intended to act as a bulwark against the impending economic downturn.

In the Federation, the House of Representatives adopted a budget rebalance on Wednesday. The upper house, the House of Peoples, is expected to do the same on Thursday.

In Republika Srpska, the budget rebalance was adopted more than a month ago. On Wednesday, officials said all procedural conditions had been met for the document to be published in the Official Gazette, which would complete the legal process.

Yet, despite these developments, the crucial loan deal still faces a number of potential hurdles.

In Republika Srpska, the final, legal confirmation of the budget rebalance is in dispute.

On Wednesday, the Bosniak caucus in the entity’s National Assembly refused to discuss the issue. In their view, this means that the rebalance document cannot be published in the Official Gazette until further discussions, which they want to hold in September.

However, the secretary of the Assembly, Ranko Karapetrovic, said that the Bosniak caucus should have used their “protection of national interests” veto, and that their refusal to do so signals acceptance of the budget rebalance.

The Bosniak caucus previously announced that it would block all key Assembly decisions until the Serb-dominated legislature’s code of conduct is changed to prevent Bosniaks from being outvoted.

Bosnia’s Office of the High Representative, OHR, which is the ultimate arbiter in such disputes, is still considering the issue and has so far failed to comment.

The Bosniak-Croat Federation, is experiencing a different set of problems.

The Federation government, and its new prime minister, Mustafa Mujezinovic, have been facing increasing pressure and intense criticism from influential war veterans’ associations and workers’ syndicates, over the planned reduction of salaries and social benefits paid from the Federation budget.

Social pressure and the growing tide of public protest in the Federation became so strong that Bosnia’s deal with the IMF was put on hold in June, less than a month after it was negotiated.

Hopes were raised when Prime Minister Mujezinovic proposed a budget reduction plan that appeared acceptable to the IMF, war veterans’ associations and trade unions.

The IMF finally approved the deal in early July, but new tensions and disputes have arisen regarding details of the cutback proposal.

Just as the Federation parliament was moving to adopt the new budget document, war veterans’ and invalids’ associations, trade unions and syndicates announced that they were considering launching a new wave of public protests.

“Rebalance adopted, strikes are starting,” Bosnian news portal Pincominfo reported. Source: Balkaninsight

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